Engelhardt v. Paul Revere Life Ins. Co., Civ.A. 96-D-699-N.

• Citation: 77 F.Supp.2d 1226
• Decision Date: 19 November 1999
• Docket Number: No. Civ.A. 98-D-20-N.,No. Civ.A. 96-D-699-N.,Civ.A. 96-D-699-N.,Civ.A. 98-D-20-N.
• Parties: Miller B. ENGELHARDT, M.D., Plaintiff, v. PAUL REVERE LIFE INS. CO., et al., Defendants. Miller B. Engelhardt, M.D., Plaintiff, v. Paul Revere Life Ins. Co., et al., Defendants.
• Court: U.S. District Court — Middle District of Alabama

Page 1226

77 F.Supp.2d 1226

Miller B. ENGELHARDT, M.D., Plaintiff, v. PAUL REVERE LIFE INS. CO., et al., Defendants.

Miller B. Engelhardt, M.D., Plaintiff, v. Paul Revere Life Ins. Co., et al., Defendants.

No. Civ.A. 96-D-699-N.

No. Civ.A. 98-D-20-N.

United States District Court, M.D. Alabama, Northern Division.

November 19, 1999.

Dennis R. Bailey, Nicholas T. Braswell, III, Charles A. Stakely, Jr., Montgomery, AL, for plaintiff.

Mark Davis Hess, Bert S. Nettles, Birmingham, AL, Mark E. Schmidtke, Valparaiso, IN, David B. Walston, Birmingham, AL, for defendant.

JUDGMENT

DE MENT, District Judge.

In accordance with the attached Memorandum Opinion And Order and Rule 58 of the Federal Rules of Civil Procedure, it is CONSIDERED, ORDERED and ADJUDGED as follows:

1. Defendant Paul Revere Life Insurance Co.'s Motion For Summary Judgment, filed August 23, 1996, be and the same is hereby DENIED AS MOOT in part and DENIED in part.

2. Plaintiff Miller B. Engelhardt's Cross Motion For Summary Judgment, filed July 30, 1998, be and the same is hereby DENIED AS MOOT in part and GRANTED in part. Pursuant to 29 U.S.C. § 1132(a)(1)(B), the court hereby CLARIFIES that Plaintiff's amendment to his policy does not exclude eye conditions which are unrelated to glaucoma and Plaintiff's eye condition resulting from a detached retina entitles Plaintiff to total disability benefits until the age of 65 so long as Plaintiff continues to meet the policy's definition of "totally disabled from your own occupation or total disability from your own occupation."

3. Plaintiff Miller B. Engelhardt be and the same is hereby AWARDED pre-judgment interest at a rate of 1.5% per month from the date Defendant Paul Revere Life Insurance Co. first denied Plaintiff's claim to the date it paid Plaintiff past benefits due under the policy.

4. Defendant Eric Baum's Motion For Summary Judgment, filed October 19, 1998, be and the same is hereby GRANTED in favor of Defendant Eric Baum and that Plaintiff take nothing by his said suit against Defendant Eric Baum.

5. Plaintiff's Motion To Remand, filed January 26, 1998, be and the same is hereby DENIED.

6. There being no remaining triable issues, the Clerk is directed to close this consolidated action.

MEMORANDUM OPINION AND ORDER

Before the court are the following motions:

1. Defendant Paul Revere Life Insurance Co.'s ("Paul Revere") Motion For Summary Judgment ("Paul Revere's Mot.Summ.J.") and supporting Memorandum Of Law ("Paul Revere's Mem."), both filed August 23, 1996;

2. Plaintiff Miller B. Engelhardt's ("Plaintiff") Cross Motion For Summary Judgment And Opposition To Defendant's Motion For Summary Judgment ("Pl.'s Mot.Summ.J"), filed July 30, 1998;

3. Plaintiff's Request For Attorney's Fees, which the court construes as a Motion For Attorney's Fees, filed August 31, 1999;

4. Defendant Eric Baum's ("Baum") Motion For Summary Judgment ("Baum's Mot.Summ.J.") and Statement Of Undisputed Facts And Memorandum Of Law In Support Of Motion For Summary Judgment ("Baum's Mem."), both filed October 19, 1998; and

5. Plaintiff's Motion To Remand, filed January 26, 1998.

The court has examined the Parties' respective motions and the numerous responses, replies and surreplies filed in support of and in opposition to the above motions. After careful consideration of the arguments of counsel, the relevant law, and the record as a whole, the court finds as follows:

1. Paul Revere's Motion For Summary Judgment is due to be denied as moot in part and denied in part;

2. Plaintiff's Cross Motion For Summary Judgment is due to be denied as moot in part and granted in part 3. The court will reserve ruling on Plaintiff's Motion For Attorney's Fees and will set a briefing schedule for the Parties to address the five factors in Florence Nightingale Nursing Svc. Inc. v. Blue Cross/Blue Shield of Alabama, 41 F.3d 1476, 1485 (11th Cir. 1995);

4. Baum's Motion For Summary Judgment is due to be granted; and

5. Plaintiff's Motion To Remand is due to be denied.

I. JURISDICTION AND VENUE

The court exercises subject matter jurisdiction over this action pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001 et seq., and 28 U.S.C. § 1331 (federal question jurisdiction). The parties do not contest personal jurisdiction or venue.

II. PROCEDURAL HISTORY AND FACTUAL BACKGROUND

A. Plaintiff's Claim Against Paul Revere, Civil Action No. 96-D-699-N

The procedural history and undisputed facts pertaining to Plaintiff's action against Paul Revere are set forth in Engelhardt v. Paul Revere Life Ins. Co., 139 F.3d 1346 (11th Cir.1998) ("Engelhardt I"), from which the court summarizes. Plaintiff was one of four surgeons who had formed a group practice. The practice joined a "multi-employer trust" established by Paul Revere, which provided group disability insurance coverage to the surgeons and the eligible employees within the surgeons' group practice. Id. at 1348.

In Plaintiff's application for disability insurance coverage, he informed Paul Revere that he had been diagnosed with glaucoma. Id. As a condition of coverage, Paul Revere required Plaintiff to sign an amendment excluding benefits for any disability related to "`either or both eyes.'" Id.

Plaintiff agreed to sign the amendment only after receiving certain assurances from both Paul Revere and Stan Montgomery ("Montgomery"), the "independent insurance agent" who sold Plaintiff the policy. Id. Montgomery told Plaintiff that the amendment solely applied to glaucoma-related problems, and Paul Revere wrote in a letter to Plaintiff that the amendment would be applied "`with common sense and reason.'" Id. Approximately two years after Plaintiff's policy became effective, Plaintiff suffered a detached retina and was no longer able to perform surgery. The detached retina was "unrelated to" Plaintiff's glaucoma. Id. Plaintiff filed a claim with Paul Revere for disability benefits under the policy. Paul Revere, which "had the exclusive right to determine eligibility for benefits," denied the claim based on the aforementioned amendment. Id.

Plaintiff filed an administrative appeal of Paul Revere's denial and asserted that he had been assured by an agent that the exclusion only applied to conditions caused by glaucoma. Id. Paul Revere then requested Plaintiff to provide additional information, such as the name of the agent who made the promise or documentation related to the agent's representation. Id. At that point, Plaintiff abandoned his administrative appeal and filed this lawsuit. Id.

Plaintiff originally brought his action against Paul Revere and Montgomery in state court on April 2, 1996.¹ In the one-count Complaint, Plaintiff alleged a state law claim for fraudulent inducement arising out of his purchase of the policy. Id. at 1349. (See also Compl. at 1.) On April 25, 1996, Paul Revere removed this action to federal court, asserting that Plaintiff's state law claim was preempted by ERISA. Id. After removal, Plaintiff amended his Complaint to add Count II, an alternative claim only against Paul Revere for wrongful denial of benefits under ERISA. Id. Plaintiff then moved to remand Count I to state court, arguing that his state law claim was not preempted by ERISA because he lacked standing to sue under its provisions. Id.

Before the court ruled on Plaintiff's Motion To Remand and during discovery in this lawsuit, Paul Revere turned over to Plaintiff a memorandum written by Paul Revere's sales representative, Eric Baum ("Baum" and "Baum Memorandum"). The Baum Memorandum substantiated Plaintiff's argument that he had been orally assured that he was covered for eye traumas not caused by glaucoma. Id. As a result of the Baum Memorandum, Paul Revere reconsidered its denial of Plaintiff's claim for benefits, determined that Plaintiff was covered under the policy, and paid Plaintiff the past benefits due. Paul Revere also offered to make future payments and to "discuss the possible reimbursement of reasonable attorney fees and costs" to Plaintiff. Id. Paul Revere then filed a Motion For Summary Judgment arguing that there was no further relief available to Plaintiff under ERISA. Id.

The court did not rule on Paul Revere's Motion For Summary Judgment. Instead, the court "directed" Plaintiff to move to dismiss Count II (the ERISA claim) based on Paul Revere's post-lawsuit payments. Id. While Plaintiff moved for dismissal, both Plaintiff and Paul Revere informed the court that the issue of attorney's fees was unresolved and that the Parties disagreed on the appropriate amount of back interest due. By written Order, the court dismissed Count II, stating that a "de facto settlement" had been reached. Id. The court, however, retained jurisdiction to rule on any unresolved issues concerning attorney's fees and back interest. Id.

In the same Order, the court also granted Plaintiff's Motion To Remand the fraudulent inducement claim (Count I). Id. The court found that Plaintiff was an "employer" and, thus, lacked standing to sue because he was not a "participant" or "beneficiary," as defined under ERISA. Id. at 1350. Therefore, the court found that Count I was saved from preemption. Id.

Paul Revere appealed the court's Order.² On appeal, Paul Revere argued the following: (1) that ERISA preempted Count I; (2) that the court erred in dismissing Count II; and (3) that the court erred in not ruling on its Motion For Summary Judgment. Id. First, in addressing Paul Revere's preemption argument, the Eleventh Circuit held that, contrary to the court's finding, Plaintiff was a "beneficiary," as defined in 29 U.S.C. § 1002(8). Id. at 1351. The Eleventh Circuit then held that Plaintiff's fraudulent inducement claim "affect[ed] the ongoing ERISA relationship between [Plaintiff] and Paul Revere," was completely preempted by ERISA and, thus, was properly removed to federal court. Id. at 1353-54. Accordingly, the Eleventh Circuit vacated this court's Order...